Topic Exchange rate risk

$18.$ Suppose that a U$.$S$.$ FI has the following assets and liabilities:

$\backslash$table$[[$Assets$,$Liabilities$],[$$$300$ million,$$500$ million$],[$U$.$S$.$ loans $($one year$),$U$.$S$.$ CDs $($one year$)],[$in dollars,in dollars$],[\backslash$table$[[$$$200$ million equivalent$],[$German loans $($one year$)],[($loans made in euros$)]],]]$

The promised one$-$year U$.$S$.$ CD rate is $4$ percent, to be paid in dollars at the end of the year; the one$-$year, default risk$-$free loans in the United States are yielding $6$ percent; and default risk$-$free one$-$year loans are yielding $10$ percent in Germany. The exchange rate of dollars for euros at the beginning of the year is $$\frac{1\mathrm{.}25}{}1.$

a$.$ Calculate the dollar proceeds from the German loan at the end of the year, the return on the FI's investment portfolio, and the net interest margin for the FI if the spot foreign exchange rate has not changed over the year.

b$.$ Calculate the dollar proceeds from the German loan at the end of the year, the return on the FI's investment portfolio, and the net interest margin for the FI if the spot foreign exchange rate falls to $$\frac{1\mathrm{.}15}{}1$ over the year.